Policies on reduction and exemption of corporate income tax

New Technology Enterprises

Beginning from the date of its establishment, a new technology enterprise shall be exempted from income tax for three years. Subject to approval of the departments appointed by the People's Government of Beijing Municipality, the income tax shall be collected at a reduced rate of 50% of the tax rate laid down in the above item for the period from the fourth year to the sixth year.

Corporate income tax for new technology enterprises in Zhongguancun Science Park shall be collected at a reduced rate of 15%. On the output value of export products of an enterprise that account for over 40% of the total output values of current year, subject to verification of the taxation authorities, the income tax shall be collected at a reduced rate of 10%.

Productive enterprises with an operating period of 10 year

Productive enterprises with an operating period of 10 years or more shall be exempted from business income tax for the first and second years beginning from the year of earning profits; and the business income tax shall be collected at a half rate from the third year to the fifth year. In response to application filed by the enterprises, the business income tax collected at a half rate may be refunded in full subject to verification and approval of financial departments of the same level. At the expiration of the period of tax exemption and reduction, on enterprises still being advanced in technology, the collection of business income tax at a half rate may be extended for another three years. If the tax rate after the cut by half is less than 10%, the tax shall be collected at a rate of 10%.

New and high tech enterprises with foreign investment

New and high tech enterprises with foreign investment shall be exempted from local income tax.

Regional headquarters of transnational corporations

If the profits of the regional headquarters of transnational corporations after paying the business income tax are used for capital reinvestment in this Municipality, the municipal finance shall refund the business income tax actually turned over to the locality in due proportion on the basis of tax refunding for reinvestment prescribed in the tax law. For the regional headquarters of transnational corporations, the local income tax shall be exempted.

Software Enterprises

According to "Some Policies on Encouraging the Development of Software Industry and Integrated Circuit Industry" and the tax policies formulated by the State departments concerned, a newly-established software enterprise, after being affirmed, shall be exempted from business income tax for the first and second years beginning from the year of earning profits, and business income tax shall be collected at a half rate from the third year to the fifth year. Software enterprises registered and affirmed in Zhongguancun Science Park may also choose to enjoy the treatment prescribed in the preferential policies on business income tax for new and high tech enterprises in the Park.

If a key software enterprise located in the state planned areas does not enjoy the preferential treatment in tax exemption of current year, the business income tax shall be collected at a reduced rate of 10%.


The salaries and expenses for training personnel of software enterprises may be deducted by the actual amount arisen when calculating the amount of taxable income.

Software enterprises established inside the Chinese territory shall enjoy preferential policies in business income tax. New software enterprises, after being certified, shall enjoy the preferential policy of exemption in the first two years and a 50% reduction in the following three years in business income tax starting from the profit-making year.

Policies on reduction or exemption of business tax

Incomes obtained by organizations and individuals (including enterprises with foreign investment, R&D centers established with foreign investment, foreign enterprises and foreign individuals) engaged in the business of technology transfer and technological development and the relevant technical advice and technical service shall be exempted from business tax.

No business tax shall be levied on the income of those organizations or individuals that are engaged in technology transfer, technology development and related technical consultation and service in this city. Also, in the light of the above, no tax shall be levied on those organizations or individuals engaged in software copyright transfer business and software research and development.

Preferential policies on business value added tax (VAT)

The state encourages the development and production of software products inside the territory of China. The legal value-added tax rate shall be 17% before 2010 for selling software products developed and produced by the general value-added tax payers. The part paid that is 3% in excess of the actual tax amount shall be refunded immediately after payment and the money shall be used for R&D of software products and expanded re-production.

Software enterprises established inside the Chinese territory shall enjoy preferential policies in business income tax. New software enterprises, after being certified, shall enjoy the preferential policy of exemption in the first two years and a 50% reduction in the following three years in business income tax starting from the profit-making year.

For key software enterprises covered by the state planning, the business income tax rate shall be 10% when they have not enjoyed tax exemption in the year. The list of key software enterprises covered by the state planning shall be fixed jointly by the State Development Planning Commission, the Ministry of Information Industry, the Ministry of Foreign Trade and Economic Cooperation and the State General Tax Administration.

The import duties and value-added tax in the import link shall be exempted on the equipment imported by software enterprises for their own use and on the technology (including software) and supporting parts and standby parts imported together with equipment according to contracts except those listed in the “Catalog of Imported Commodities that are not free from taxation for foreign-funded projects” and the “Catalog of Imported Commodities that are not free from taxation for domestically-funded projects”.

The salaries and remunerations and training fees of the personnel of software enterprises may be listed as expenses according to the actual amount that happened before paying business income tax.

For an ordinary value added tax payer who sells software products developed and produced by himself, the value added tax shall be collected at the statutory rate of 17% before 2010, and the portion that exceeds the actual tax burden by 3% shall be refunded immediately after collection.

For an ordinary value added tax payer who sells integrated circuit products (including mono-crystalline silicon wafer) of his own production, the value added tax shall be collected at the statutory tax rate of 17% before 2010, and the portion which exceeds the actual tax burden by 6% shall be refunded immediately after collection, and shall be used by the enterprise for researching and developing new integrated circuit products and for expanded production.

Policies on tariff preference

Equipment and goods imported by a research and development institute for its own use in accordance with the provisions on tax exemption under the items of industries encouraged by the state and the provisions on tax exemption on articles for scientific and educational purposes shall be exempted from tariff and import link added value duty, except for commodities which are not duty free in accordance with the State provisions.

Equipment for its own use imported by an enterprise (including foreign funded enterprises and foreign enterprise) for turning out products listed in the “State Catalogue of New and High Tech Products” and the technologies and accessories and spare parts imported together with the equipment in accordance with the contract shall be exempted from tariff and import link added value duty, except for commodities which are not duty free according to relevant provisions.

Software overhead paid overseas by an enterprise in accordance with the provisions the contract for introducing advanced technologies listed in the “State Catalogue of New and High Tech Products" shall be exempted from tariff and the import link added value duty. For products listed in the "Catalogue of Chinese New and High Tech Export Commodities" of the Ministry of Science and Technology and the Ministry of Foreign Trade and Economic Cooperation, if the export duty rebate rate has not reached the duty rate, subject to the verification and approval of the State Administration of Taxation, the procedure of duty rebate may be gone through after the products are exported in accordance with the duty rate and the existing rules for the administration of export duty rebate.

Equipment imported by a software enterprise for its own use and the technologies (including software) and accessories and spare parts imported together with the equipment in accordance with the contract shall be exempted from tariff and the import link added value duty, except for commodities listed in the “Catalogue of Commodities for Projects with Foreign Investment that shall not be Imported Duty Free" and the “Catalogue of Commodities for Projects with Domestic Investment that shall not be Imported Duty Free". The enterprise may directly declare to the customs by showing the certificate of affirmation of a software enterprise, and go through the formalities for the relevant tax exemption.